Venture capitalists see profit in greener future!
Vancouver, Canada (by Gillian Shaw, Vancouver Sun) - Venture capitalists shovelled $3.6 billion US into green and clean ventures last year, almost doubling their investment over 2005 and helping drive “cleantech” to become one of the fastest-growing sectors in the North American venture capital market.
“The opportunities in ‘cleantech’ or ‘greentech’ stems from a growing need in the world for improvement,” said Jim Charlton, senior vice-president of investments at Vancouver’s GrowthWorks. “There is a huge investment opportunity in this.
“It is arguably one of the areas where a lot of fortunes will be made in the future.”
“Cleantech” is this millennium’s answer to the envirotech of the ’70s and ’80s, and while definitions vary in scope, “cleantech” covers a broad range of industries, from energy to water and waste and other innovative technologies meeting the environmental and ecological challenges facing the world today.
“We have been investing in these kinds of companies since the late 1980s,” said David Berkowitz, a partner in Ventures West who leads the cleantech practice at the investment firm that was an early investor in Ballard Power Systems. “It wasn’t called cleantech back then, and until recently there was only a handful of investors in North America. We all knew each other and did deals together. But lately there has been a rush, particularly on the venture side.
“It is probably the fastest-growing sector in North American venture capital.”
The prospect of fortunes to be made saving the world is drawing huge investment dollars.
According to the Ann Arbor-based Cleantech Venture Network, North American and European venture investment in cleantech totalled $903 million US in the first quarter of this year. While that is down from a record $1.1 billion invested in the third quarter of 2006, it’s still a hefty 42-per-cent hike over the $634 million invested during the first quarter last year.
British Columbia is home to some world-leading innovations that come under a broad range covered by the cleantech category, and venture capitalists here feel the opportunities are only going to grow.
“We see it as a great opportunity because we strongly believe in man’s ability to overcome adversity; where there is a problem, it creates opportunity,” said Berkowitz.
GrowthWorks, which was among the early backers of Xantrex Technology, a global innovator in advanced power electronics, sees potential in up-and-coming B.C. companies such as NxtGen Emission Controls and Angstrom Power.
“[There is] a definite investment opportunity,” said Charlton. “The only reason we would look at these businesses is we think they will be money makers, these are areas that will continue to grow.”
While Charlton said individual companies may not last, the sector will continue to represent a growing opportunity.
“There will be different technology and different applications, but it is not going away,” he said.
Some experts are warning the investment bubble may burst, most notably in the energy sector where, according to Lux Research’s Cleantech report, the value of global initial public offerings (IPOs) jumped to $4.1 billion US in 2006, up from $1.6 billion the year earlier.